Financial and Economic Literacy for Managers

Financial and Economic Literacy for
Managers
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Table of Contents
INTRODUCTION 3
1. Consumer sovereignty’ and its influence on the production decisions 4
2. Critically examines the market structure, demand and supply 5
3. Compare and contrast wealth maximisation and profit maximisation 6
4. Business economics concepts of environmental policy, fiscal policy, supply side policies to the desire
of the UK government 8
5. Financial prediction 9
CONCLUSION 11
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INTRODUCTION
Financial and business economies are two major concepts, which is necessary to enhance growth and
suitability of business at the higher and optimized stage. In addition to this, for future benefits, it has
become necessary to hold and stay shareholders, who are recognized as major wealth for enhancing
business operation. Also, demand and supply are also required to know consumer behavior in a higher
context. This has become necessary to evaluate demand and supply of customer purchase to lead high
sales in a given period of time. Also, wealth and profit maximization are both two empowering
concepts, which needs a comparison to know its benefits to the business. This report will be cover on
the comparison and contrasting of both wealth and profit maximization for understanding suitability
and relevance to business entities.
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1. Consumer sovereignty’ and its influence on the production decisions
Consumer sovereignty is an effective economic concept, which is basically referred to as the power of
the consumer to control any kind of product formation and deals with the final output produced in an
economy. In today's business influence, buyers are majorly one entity whose impact has become
bigger and impact on business performance (Taft, 2013). Buyer's demand is increased over a period of
time, which has a straight influence on the production of goods and services in a higher context. As, it
was discussed that consumer sovereignty means control of consumer on the production of final goods
to be sold, in that case, profit maximization is a major tension. This is why, because consumer are
highly looking for their own level of satisfaction and also their matter of interest is heavily impactful
for production to pursue. This is all concepts are a major part of economics and finance, which is
necessary to understand for analyzing consumer behavior to maintain profit existence at the greater
side. Into the current business scenario, it was noticed that consumer are more becoming inclined
towards their own needs and wants at the one point of time and also led the business firm to change
their production capacity, which is a major impact on profitability at a higher context.
In that situation, demand has its own major influential which is necessary to have an
understanding and along with discussion over theories of it to know whether it has been controlled on
higher context or not. Consumer influence has been raised over a period of time and also it has led
business production firm to change their strategies at a higher context (Lusardi, 2012). This matter
covers under the concept of business and financial economics to make understand production
fluctuation either has any impact or know whether they are impacting profit generation of the business
firm. A company whose major process of business linked to its production, they need to have an
outlook on profit regulation along with maintaining consumer attention at a bigger and regulative stage
to enhance business functioning at a future stage. To understand consumer behavior, it is necessary to
understand demand theory to know consumer sovereignty to measure how profit consistency can be
maintained in the business functioning.
Deriving demand curve: This is based on neoclassical consumer theory, as it states that, any
change in price factor may affect consumer budget and its ability to spend on the given product. Also,
product consistency is one of the major matter to be get solved, as if the product found faulty, it will
simply impact customer consistency to buy and production will come down. This theory has been taken
to understand and realize the utility generation of consumer and measuring it with a price which
consumer is ready to pay for a given time duration (Lusardi and Mitchell, 2014). This means that if the
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